Final term Project report

Investment Banks, Mortgage banks, & Pension Fund

Subject:

Financial Institutions and Markets

Submitted to:
Prof. Itrat Naz
5th Semester
By
Fezan Akhtar
MBAP-F13-19
Faisal Saeed
MBAP-F13-07
Hina Shaheen
MBAP-F13-10
Ammara Ch
MBAP-F13-24

MASTERS IN BUSINESS ADMINISTRATION

Faculty of Management Sciences
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THE SUPERIOR UNIVERSITY LAHORE

Campus, Okara, Pakistan

Table of

Content

Investment
Banks
.3
1. Define Investemnt Banks.................................................................................3
2. Concept of Investment Banks...........................................................................4
3. Role of Investment Banks............................................................................. 4
4. Investment Banks Services...........................................................................5
5. Other Activities of Investment Banks.................................................................6
Investment Banker..

.7
1. Functions of Investment Banker.......................................................................7
2. Qualification of Investment Banker...................................................................7
Investment Banks in
Pakistan
.8
1. Top tens Investment Bank in Pakistan................................................................8
Mortgage Markets and
Banks
. 11
1. History of Mortgage..................................................................................... 11
2. Define Mortgage.......................................................................................... 11
3. Market in Mortgage..................................................................................... 11
4. Types of Mortgage Loans..............................................................................12
Pension
Fund
..14
1. Introduction of Pension Fund.........................................................................14
2. Define Pension Funds................................................................................... 14
3. Types of Pension.......................................................................................... 15
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4. Pension Plans.............................................................................................. 15
5. Defined Benefit versus Defined Contribution pension funds.................................16
ERISA

.19
1. History of ERISA......................................................................................... 19
2. Functions of ERISA..................................................................................... 19
References

...20

Investment Banks:
An investment bank is a financial institution that assists corporations and governments
in raising capital by underwriting and acting as the agent in the issuance of securities. An
investment bank also assists companies involved in mergers and acquisitions, divestitures, etc.
Further it provides ancillary services such as market making and the trading of derivatives, fixed
income instruments, foreign exchange, commodity, and equity securities.
Unlike commercial banks and retail banks, investment banks do not take deposits.
Trading securities for cash or securities (i.e., facilitating transactions, market-making), or the
promotion of securities (i.e., underwriting, research, etc.) was referred to as the "sell side".
Dealing with the pension funds, mutual funds, hedge funds, and the investing public who
consumed the products and services of the sell-side in order to maximize their return on
investment constitutes the "buy side". Many firms have buy and sell side components.
Investment banks help companies and governments and their agencies to raise money by
issuing and selling securities in the primary market. They assist public and private corporations
in raising funds in the capital markets (both equity and debt).
Investment banks also act as intermediaries in trading for clients. Investment banks
differ from commercial banks, which take deposits and make commercial and retail loans. In
recent years, however, the lines between the two types of structures have blurred, especially as
commercial banks have offered more investment banking services.
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Investment banks may also differ from brokerages, which in general assist in the
purchase and sale of stocks, bonds, and mutual funds. However, some firms operate as both
brokerages and investment banks; this includes some of the best known financial services firms
in the world.

Definition:
An individual or institution, which acts as an underwriter or agent for corporations and
municipalities issuing securities. Most also maintain broker/dealer operations, maintain markets for
previously issued securities, and offer advisory services to investors. Investment banks also have a
large role in facilitating mergers and acquisitions, private equity placements and corporate
restructuring. Unlike traditional banks, investment banks do not accept deposits from and provide loans
to individuals. Also called investment banker.

Concept of Investment Bank:

The banking scenario Pakistan is itself huge, covering the different facets of the economy. By
and large, investment banks in Pakistan are itself an institution which generates funds in two
different ways. The first manner in which it works is by drawing public funds via the capital
market by way of selling stock in their company. The other way in which it operates is to seek
for venture capital or private equity, as a substitute for a stake in their company.

Role of an Investment Bank:

The major work of investment banks includes a lot of consulting. For instance, they
offer advices on mergers and acquisitions to companies. The role that an investment bank plays
sometimes gets overlapped with that of a private brokerage house. The usual advice of buying
and selling is also given by investment banks.
There is no demarcating line between the investment banking and other forms of banking
in India. This has been observed majorly of late. All banks nowadays want to provide their
customers the best of services and create a niche for themselves and that is why apart from
investment banks, all other banks too are aiming at making it big.
At the macro level, investment banking is related with the primary function of assisting the
capital market in its function of capital intermediation, i.e., the movement of financial resources
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from those who have them (the investors), to those who need to make use of them for producing
GDP (the issuers). Over the decades, investment banks have always suited the needs of the
finance community and thus become one of the most vibrant and exciting segment of financial
services.
Globally investment banks handle significant fund-based business of their own in the
capital market along with their non-fund service portfolio which is offered to the clients. All
these activities are broadly segmented across three platforms - equity market activity, debt
market activity and merger and acquisitions (M&A) activity.

Investment Banks Provide Four Primary Services:

Raising capital, advising in mergers and acquisitions, executing securities sales and
trading, and performing general advisory services. Smaller investment banks may specialize in
two or three of these categories.

Raising Capital:
An investment bank can assist a firm in raising funds to achieve a variety of
objectives, such as to acquire another company, reduce its debt load, expand existing operations,
or for specific project financing. Capital can include some combination of debt, common equity,
preferred equity, and hybrid securities such as convertible debt or debt with warrants. Although
many people associate raising capital with public stock offerings, a great deal of capital is
actually raised through private placements with institutions, specialized investment funds, and
private individuals. The investment bank will work with the client to structure the transaction to
meet specific objectives while being attractive to investors.

Mergers and Acquisitions:

Investment banks often represent firms in mergers, acquisitions, and divestitures.
Example projects include the acquisition of a specific firm, the sale of a company or a subsidiary
of the company, and assistance in identifying, structuring, and executing a merger or joint
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venture. In each case, the investment bank should provide a thorough analysis of the entity
bought or sold, as well as a valuation range and recommended structure.

Sales and Trading:

These services are primarily relevant only to publicly traded firms, or firms, which
plan to go public in the near future. Specific functions include making a market in a stock,
placing new offerings, and publishing research reports.

General Advisory Services:

Advisory services include assignments such as strategic planning, business
valuations, assisting in financial restructurings, and providing an opinion as to the fairness of a
proposed transaction.

Other activities
While advising companies and helping them raise money is an important part of what Wall Street
firms do, most perform a number of other functions as well. In fact, most major banks are highly
diversified in terms of the services they offer. Some of their other income sources include:

Research:
Larger investment banks have large teams that gather information about companies and
offer recommendations on whether to buy or sell their stock. They may use these reports
internally but can also generate revenue by selling them to hedge funds and mutual fund
managers.

Trading and Sales:

Most major firms have a trading department that can execute stock and bond transactions
on behalf of their clients. In the past, some banks have also engaged in proprietary
trading, where they essentially gamble their own money on securities; however, a recent
regulation known as the Volcker Rule has clamped down on these activities.

Asset Management:
The likes of J.P. Morgan and Goldman Sachs manage huge portfolios for pension funds,
foundations and insurance companies through their asset management department. Their
experts help select the right mix of stocks, debt instruments, real estate trusts and other
investment vehicles to achieve their clients unique goals.

Wealth Management:

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Some of the same banks that perform investment banking functions for Fortune 500
businesses also cater to everyday investors. Through a team of financial advisors, they
help individuals and families save for retirement and other long-term needs.

Securitized Products:
These days, companies often pool financial assets from mortgages to credit card
receivables and sell them off to investors as a fixed-income product. An investment
bank will recommend opportunities to securitize income streams, assemble the assets
and market them to institutional investors.

Investment Bankers:
Investment bankers are regarded as those persons who generally give consultation to
their valued clients in order to sort out any of their high level issues that may have taken place in
their financial organization.

Functions of Investment Bankers

Apart from advising the investment bankers also performs various functions such as:

Investment bankers administer the bonds-issuance.

Control the selling of the stock of their organization to the general public.
They also play the role of strategists in order to solve out financial problems of their

clients
They also help the clients to develop their financial policies and also apply them.
Since all the works are time consuming investment bankers also work for prolong hours.
Investment bankers also emerge new innovative ideas and schemes for developing

strategies to pitch to clients

Prepare pecuniary analyses and documents
An investment banker should not accept deposits or make commercial loans.
Even Investment bankers do the grunt work for IPO's and bond issues.

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Qualification for Investment Bankers

A Masters in Business Administration with 2 years of post-graduate study is essential to

grow up in this particular area.

Jobs in entry-level for analyst programs are obtainable to those graduate undergoes who

require experience in investment banking profession.

Analysts are essential in making proposals in finance and travel in order to sit with the
clients during meetings and sessions where senior bankers discuss ideas to potential

customers.
After this comes the requirement of MBA degree holder investment banker.

Investment Banks in Pakistan

Bank is a financial institution, where the transactions are taken place. Of the notable banks is
commercial banks which operate under the regulations passed by state bank of Pakistan (SBP).
Including many other banks there is a list of banks which help the customers to increase the
capital, which are better known as investment banks. Thus an investment bank is a financial
institution which helps customer, government and the corporations to invest capital. This can be
done through under writing as the customers or clients agent in the issuance of securities. Other
than that an investment bank also helps those companies which are involved in mergers and it
also provide services like, market making and equity securities.
The investment banks vary from the commercial banks and the other retail banks is that,
investment banks do not take deposits however the commercial banks take deposits. Therefore,
there is a great difference between these categories of banks, for this reason United states have
separated both kinds of banks. Following are the few investment banks in Pakistan;

1. IGI Investment Bank:

As later as in 2006, IGI insurance limited to the shareholding of American Express and as a
result it became a major shareholder in IGI Investment Bank.
This investment bank is reliable because it has been licensed by SECP (Securities and Exchange
Commission of Pakistan). This investment bank is listed on the stock Exchanges of three main
cities across the country i.e. Karachi, Lahore and Islamabad.

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2. Standard Chartered Bank:

To invest ones income in the best place so as to get perfect profit is an important decision.
Standard chartered investment services help its customers to invest the hard earn income. This
bank provides its perfect services to maximize the returns and to minimize its profits.
For the perfect return a customer can invest in the categories involving, fixed income,
government securities, mutual funds and the retail term finance certificates.

3. HSBC Pakistan:
HSBC is accepted as an active investment banking players in Pakistan. With its aim to promote
the capital HSBC investment banking in Pakistan focuses on the transaction in the area of project
and the financing of exports. Although the idea has been recently established however its
performance has been impressive even though it operated in the short run. The uniqueness of the
institution is that most of the transactions are operated cross the border due to which there is high
competency.

4. KASB Bank:
KASB Bank also operates at its best in providing its services as investment banking. The group
concerned with investment banking serves as a trusted adviser to premier clients, which helps in
developing and achieving their strategic objectives and it helps them to achieve financial needs.
This bank provides its services in the following ways, merger and acquisitions, privatization,
corporate restructuring, project finance, debt servicing and many more.

5. Dubai Islamic Bank:

With a professional team for the purpose DIBPL provides its perfect services in order to raise
their capital for the local and regional clients in the short span of time. This bank operates under
Shari principles therefore it is mostly preferred to all others. The investment banking team at the
bank provides the services including Project finance, mergers and acquisitions advisory,
privatization advisory, real estate advisory, balance sheet restructuring, private placements,
syndication, sukkuk issuance.

6. JS Bank:
JS bank investment banking group has been the pioneer of land mark transactions to the
domestic capital markets. It provides the following services, corporate finance advisory,
arrangement and placement of securities, trust and security services, underwriting, and bankers
to the issue.
With due efficiency the bank provides market leading investment banking services.
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7. Citi Bank:
The citi bank is also one of the best investment banks in Pakistan; it has been recognized as the
best arranger of the loans. In January it was awarded as the Bank of the Year where as in 1998 it
won another award and it was awarded as the best arranger of the loans by Euro week.

8. Meezan Bank:
Keeping in view the diversified needs of the customers Meezan Bank has a specialized
department which specifically focuses on the investment banking services. This department
gives the specific attention towards the financial solutions through diverse products which offers
financing solutions to the banks clients.

9. UBL
UBL Investment Banking Group which was established in 2002 is one of the most experiences
banking group in the field of investment banking and it is one of the largest banking group. The
specific attributes of the UBL is that it is consist of a specialist team of 19 investment bankers,
who have a very standard academic records and they have also experience in Pakistan as well as
in UAE.

10. Al Baraka:
Al Baraka bank has a vision for unrivalled services which are according to Islamic principles of
banking and this bank is dedicated to banking industry in Pakistan. The banking services include
investment banking and its team actively helps its clients providing financing needs which helps
the clients developing strategic objectives. Since this bank helps according to Islamic Shariah
therefore it is one of the reliable banks for many of its clients.

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History of the mortgage:

The modern mortgage has only been around since the 1930s, but the idea of a mortgage has been
around for a lot longer.
First, its important to talk about the meaning of the word mortgage. To understand the word,
we need to break it down into two separate Latin words: mort and gage. Mort means death
and gage means pledge. A mortgage is a dead pledge.
Dont let that scare you! The dead part of the mortgage doesnt refer to you or any other person.
Instead, it refers to the idea that the pledge died once the loan was repaid, and also the idea that
the property was dead (or forfeit) if the loan wasnt repaid.
Mortgages are mentioned in English common law documents that take back as far as 1190. These
documents illustrate the beginnings of a basic mortgage system. They describe how a creditor is
protected in property purchase agreements. Specifically, a mortgage was a conditional sale where
the creditor held the title to the property while the debtor could sell that property in order to
recover the money paid.
Essentially, a mortgage is a loan secured by a property. Most people dont have the liquid capital
required to purchase a house entirely on its own and mortgages help these people purchase
homes and properties.
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Define Mortgage:

A mortgage is a method of using property as security for the performance of an

obligation, usually the payment of a debt.

Arranging a mortgage is seen as the standard method by which individuals and

businesses can purchase residential and commercial real estate without the need to
pay the full value immediately.

Two Markets Involve in Mortgage

Primary market:
where mortgage origination takes place. Lenders creating mortgages in this market include banks
and other financial institutions.

Secondary market:
where mortgages are resold. Mortgages in this market are often grouped together into tranches
based on risk, size, and structure and are then sold as a collateralized debt obligation, mortgagebacked security, or other type of derivative.

Types of Mortgage Loan Programs

Fixed-Rate Mortgage Types:
This is the granddaddy of them all. Today you can choose from 5-year, 10-year, 15-year, 20-year,
30-year, 40-year and even 50-year fixed-rate mortgages, all of which are completely amortized.

FHA Loans:
Federal Housing Administration (FHA). mortgage loan types are insured by the
government through mortgage insurance that is funded into the loan. First-time home buyers are
ideal candidates for an FHA loan because the down payment requirements are minimal
and FICO scores do not matter.

VA Loans:
This type of government loan is available to veterans who have served in the U.S. Armed
Services and, in certain cases, to spouses of deceased veterans. The requirements vary depending
on the year of service and whether the discharge was honorable or dishonorable. The main
benefit to a VA loan is the borrower does not need a down payment. The loan is guaranteed by
the Department of Veteran Affairs, but funded by a conventional lender.

Interest-Only Mortgage Types

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Calling a mortgage loan type an "interest-only mortgage is a bit misleading because these loans
are not really interest only, meaning the borrower pays only interest on the loan. Interest-only
loans contain an option to make an interest-only payment. The option is available only for a
certain period of time. However, some junior mortgages are indeed interest only and require
a balloon payment, consisting of the original loan balance at maturity.

Hybrid Types of Mortgage Loans

Option ARM Mortgage Types:
Option ARM loans are complicated. They are adjustable-rate mortgages, meaning the interest
rate fluctuates periodically. Like the name implies, borrowers can choose from a variety of
payment options and index rates, but beware of the minimum payment option, which can result
in negative amortization.

Combo / Piggyback Mortgage Loan Types:

This type of mortgage financing consists of two loans: a first mortgage and a second mortgage.
The mortgages can be adjustable-rate mortgages or fixed-rate or a combination of the two.
Borrowers take out two loans when the down payment is less than 20% to avoid paying private
mortgage insurance.

Adjustable-Rate Mortgage Types:

Adjustable-rate mortgages (ARMs) come in many flavors, colors and sizes. The interest rate
fluctuates. It can move up or down monthly, semi-annually, annually or remain fixed for a period
of time before it adjusts.

Mortgage Buy downs:

Borrowers who want to pay a lower interest rate initially often opt for mortgage buy downs. The
interest rate is reduced because fees are paid to lower the rate, which is why it's called a buy
down. Buyers, sellers or lenders can buy down the interest rate for the borrower.

Specialty Mortgage Loan Types

Streamlined-K Mortgage Loans:
Like the 203K loan program, FHA has another program that provides funds to a borrower to fixup a home by rolling the funds into one loan. The dollar limits for repair work are lower on a
Streamlined-K loan, but it requires less paperwork and is easier to obtain than a 203K.

Bridge / Swing Loans:

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These types of mortgage loans are used when a seller has put a home on the market -- but it has
not yet sold -- and the seller wants to borrow equity to buy another home. The seller's existing
home is used as security for a bridge (also called swing) loan.

Equity Mortgage Loan:

Equity loans are second in position and junior to the existing first mortgage. Borrowers take out
equity loans to receive cash. The loans can be adjustable, fixed or a line of credit from which the
borrower can draw funds as needed.

Reverse Mortgages:
Reverse mortgage are available to any person over the age of 62 who has enough equity. Instead
of making monthly payments to the lender, the lender makes monthly payments to the borrower
for as long as the borrower resides in the home. The interest rate can be fixed or adjustable. Get
independent advice from a trusted advisor before taking out a reverse mortgage.

Pension Fund
Introduction:
Pension funds are pooled contributions from pension plans set up by employers and other
organizations to provide for the employees retirement benefits. Pension funds are large
investment blocks in most economies and a major factor in the stock market. These funds are
managed by professional fund managers and fall under the institutional investor category.
Pension funds are exempt from capital gains tax, and earnings from their investment portfolio are
tax exempted.

Pension funds are in the national public interest and the legislative language explicitly defines
such funds in various laws. Pension funds perform important economic functions, such as
mobilizing and managing savings, providing income stability, making labor markets more
efficient and providing exposure to systemic risk in the financial markets.
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Definition: A pension plan is an asset pool that accumulates over an individuals working
years and is paid out during the nonworking years.

Pension fund investments:

Pension fund investments include conventional securities, such as stocks and bonds, real estate
and alternative investments, such as hedge funds and structured securities. Pension fund
investment portfolios also include derivatives.

Making pension fund choices:

Making a pension fund choice is important, since it will affect your income after retirement.
Different types of investments in pension funds have different levels of volatility. Usually the
funds offered fall into the following categories:

Cash: This means money saved for deposit either in a bank or financial institution.

Bonds: These are either government or private loans that pay a rate of interest until the
loan is repaid.

Property: This is money invested in land or buildings.

Equities: Are shares in private companies.

Types of Pensions
The pension fund industry comprises two distinct sectors.
1. Private pension funds: are those funds administered by a private corporation (e.g.
(insurance company, mutual fund).
Any pension plan set up by employers, groups, or individuals.
2. Public pension funds: are those funds administered by a federal, state, or local
government (e.g., Social Security).
Any pension plan set up by a government body for the general public.
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Pension Plan
Document that governs the operations of a pension fund.
1. Insured pension fund: A pension fund administered by a life insurance company.

Pool of money invested in Insurance Company

The assets purchased with the premiums from the Insurance Company.

Become the legal property of the insurance company managing the

pension funds.

Because they bear the risk of Assets failure.

2. Non Inured pension funds: managed by a trust department of a financial institution

appointed by the sponsoring business, participant, or union.

Trustee invest the contributions and pay the retirement benefits in

accordance with the terms of the pension fund.

Invested by the sponsor but segregated and listed as a separate pools of

assets on the trustees balance sheet.

The assets purchased from the noninsured pension funds are the legal
property of the sponsoring corporation.

Noninsured pension funds generally offer the potential for higher rates of
return but are also more risky than insured pension funds.

Because noninsured pension funds managers, by contrast, do not incur the

risk associated with the asset value fluctuations. Thus the trustees
overseeing the pension funds generally invest pension premiums received
in riskier securities.

However, the higher rates of return allow the employee to reduce

contributions necessary to achieve a given amount of funds at retirement.
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Defined Benefit versus Defined contribution Pension Funds

Defined Benefit Pension fund: A plan where the employer promises the employee a specific
benefit when they retire.

Flat benefit formula

Career average formula

Final pay formula

Fully funded

Underfunded

Overfunded

Flat benefit formula:

Pays a flat amount for every year of employment.

Example: A employee with 20 years of service at a company is considering retirement at some

point in the next 10 years. The employer uses a flat benefit formula by which the employee
receives an annual benefit payment of $2000 times the number of years of service. For retirement
now, in 5 years, and in 10 years, the employees annual retirement benefit payment is.
1. Retire now

$2000 x 20 = $40,000

2. Retire after 5 years

$2000 x 25 = $ 50,000

3. Retire after 10 years

$2000 x 30 = $ 60,000

Career average formula:

Pension fund that pays retirement benefits based on the employees average salary over
the entire period of employment.
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Example: An employee with 20 years of service at a company is considering retirement some

times in the next10 year. The employer uses a career average benefit formula by which the
employee receives an annual benefit payment of 4 percent of his career average salary times the
number of years of service. For retirement now, in 5 years, and in 10 years, the employees
annual retirement benefit payment is:
Average Salary

Retirement Benefit

1. Retire Now

$ 48000

$ 48000 x .04 x 20 = $38,400

2. Retire in 5 years

$ 50000

$ 50,000 x .04 x 25= $ 50,000

3. Retire in 10 years

$ 52,000

$52,000 x .04 x 30 = $ 63,000

Final Pay Formula:

Pays a retirement benefit based on a percentage of the average salary

during a specified number of years at the end of the employees career
times the number of years of services.

Example: An employee with 20 years of service at a company is considering

retirement at some times in the next 10 years. The employer uses a final pay
benefit formula by which the employee receives an annual benefit payment
of 2.5 percent of her average salary during her last five years of service
times her total years employed. For retirement now, in 5 years, and in 10
years, the employees (estimated) annual retirement benefit payment is:
Average salary
Retire now

$75,000

Retirement Benefit
$75,000 x .025 x 20 = $37500

Retire after 5 years

$ 80,000

$ 80,000 x .025 x 20 = $50,000

Retire in 10 years

$ 85,000

$ 85,000 x .025 x 20 = 63,750

Fully funded: when sufficient funds are available to meet payouts.

Overfunded: funds exceed the expected payout.
Underfunded: funds are not expected to meet the required benefit payouts.

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Defined-Contribution Pension Plan: Pension fund in which the employer

agrees to make a specified contribution to the pension fund during the
employees working years. So the final retirement benefit is based on
1. Employer contribution
2. Any additional employee contribution
3. Gain or losses on the investments purchased by the fund with these
contributions.

Functions of Pension Funds

The Pension Fund functions in accordance with the terms of the Letter of Appointment and the
Regulations issued by Authority from time to time. PF is mandated to invest and manage the
pension assets of the subscribers covered under NPS, which is inclusive of but not confined to
the following1. Investment of contributions as per investment guidelines prescribed by the Authority.
2. Scheme portfolio construction.
3. Maintains books and records of its operations.
4. Reporting to the Authority at periodical intervals.
5. Public disclosure.

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History of ERISA:
The Employee Retirement Income Security Act of 1974, or ERISA, protects the assets
of millions of Americans so that funds placed in retirement plans during their working lives will
be there when they retire.
ERISA is a federal law that sets minimum standards for pension plans in private industry. For
example, if an employer maintains a pension plan, ERISA specifies when an employee must be
allowed to become a participant, how long they have to work before they have a no forfeitable
interest in their pension, how long a participant can be away from their job before it might affect
their benefit, and whether their spouse has a right to part of their pension in the event of their
death. Most of the provisions of ERISA are effective for plan years beginning on or after
January,1975.
ERISA does not require any employer to establish a pension plan. It only requires that
those who establish plans must meet certain minimum standards. The law generally does not
specify how much money a participant must be paid as a benefit.

Employee Retirement Income Security Act - ERISA

The Employee Retirement Income Security Act (ERISA) is the Employee Retirement Income
Security Act of 1974 (ERISA) protects the retirement assets of Americans by implementing rules
that qualified plans must follow to ensure that plan fiduciaries do not misuse plan assets.
FUNCTIONS OF ERISA
Requires plans to provide participants with important information about plan features and
funding. The plan must furnish some information regularly and automatically. Some of this
information is available free of charge.

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 Sets minimum standards for participation, vesting, benefit accrual and funding. The law
defines how long a person may be required to work before becoming eligible to participate in
a plan, to accumulate benefits and to have a non-forfeitable right to those benefits. The law
also establishes detailed funding rules that require plan sponsors to provide adequate funding
for the plan.
Requires accountability of plan fiduciaries. ERISA generally defines a fiduciary as anyone
who exercises discretionary authority or control over a plan's management or assets,
including anyone who provides investment advice to the plan. Fiduciaries who do not follow
the principles of conduct may be held responsible for restoring losses to the plan.
Gives participants the right to sue for benefits and breaches of fiduciary duty.
Guarantees payment of certain benefits if a defined plan is terminated through a federally
chartered corporation, known as the Pension Benefit Guaranty Corporation.
Protects the plan from mismanagement and misuse of assets through its fiduciary provisions.

References:

www.scribd.com
www.investopida.com
www.slideshare.com
www.wikipida.com
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